The clinical trial involved 19 participants and found the powder reduced the time to onset sleep, increased the deepest phase of sleep and reduces daytime dysfunction - including sleepiness, fatigue, impaired memory and poor concentration, Causer said.
iNdream3 has been stocked by a Korean Synlait customer since January.
Their product, Sleepiz, is sold as a powder in a sachet that consumers reconstitute as a drink.
Synlait's Managing Director Dr John Penno said the product represented an exciting opportunity for the company.
"It demonstrates our capability as a nutritional business to create and add value for the long term," he said.
"This is a high value product. Both Synlait and our milk suppliers who provide night milk will benefit, with suppliers receiving a payment above the market milk price," Penno said.
Synlait was continuing to develop opportunities through other business to business customers looking to use iNdream3 as an ingredient in their products, he said.
The product's development received support from DairyNZ through the Transforming the Dairy Value Chain Primary Growth Partnership programme and its clinical trial received additional funding from New Zealand Trade and Enterprise.